Scotland Courts Oil Producers With Taxes Lower Than U.K. Budget
Scotland Energy Minister Fergus Ewing is seeking to court investment in the region’s oil and gas industry and become a hub for offshore wind developers by reducing corporate taxes included in the U.K. government budget.
“The budget was difficult for us,” Ewing said yesterday in an interview at Bloomberg News headquarters in New York. “Oil and gas producers want stability and we’re giving it to them. The tax-equity grab is not what people expected from the U.K.”
The remarks shed light on the Scottish government’s efforts to wrest control of the region’s oil resources from the U.K. as politicians from London to Edinburgh debate a proposal from Scottish nationalists on whether to hold a referendum on independence.
Prime Minister David Cameron’s government released a budget plan last month that boosts taxes on North Sea oil producers by 1.14 billion pounds ($1.8 billion) over the next six years. The U.K.’s three main political parties oppose independence for Scotland.
Ewing, a lawmaker for the Scottish National Party, is on a tour of North America seeking to boost investor interest in Scotland.
Scotland aims to bolster revenue from energy companies that would underpin its finances if it separates from the U.K. Oil and gas production in the North Sea provided 8.8 billion pounds of revenue for the British Treasury in the fiscal year through April 2011, about 1.6 percent of the 550.8 billion pounds of total receipts.
Scottish First Minister Alex Salmond, leader of the semi- autonomous government in Edinburgh, wants to call a referendum on independence in 2014. The U.K. government budget, released on March 21, reduces the Treasury’s revenue from North Sea production by $160 million pounds for this fiscal year, then increases taxes by 2.53 billion over the next four years.
Scotland also is working to build up its sources of renewable energy, especially offshore wind farms and plants that generate electricity from tides and ocean currents.
The regional government has pledged to obtain all of its electricity from renewable sources by 2020 and to export power to Ireland and Norway.
“We don’t see the referendum as reducing investment, in fact quite the opposite,” Ewing said, citing recent commitments from offshore wind turbine developers.
Gamesa Corp. Tecnologica SA (GAM), Spain’s biggest wind-turbine maker, last month opted to locate a 150 million-euro ($196 million) offshore wind energy hub in Leith, the port area of the Scottish capital Edinburgh.
Leith edged out the northeast English coastal town of Hartlepool to win the investment, which will make it a focal point for an industry that may be worth as much as $52 billion over the next eight years.
Samsung Heavy Industries Co. said on Jan. 31 that it will base a 100 million-pound offshore wind project creating more than 500 jobs across the Forth River estuary from Leith in Methil.
“Our opponents have tried to scare people but we don’t see the evidence that it’s working,” Ewing said.
He expects to install as much as 25 gigawatts of offshore wind turbines and 1.6 gigawatts of tidal and wave power.
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